At Ten Accountants we believe that small business can learn a lot of big businesses. Perhaps the most important lesson is to develop and focus on the right Key Performance Indicators (KPIs).
The Improving the Numbers service is based on research from leading sources around the world. This article is based on a report by PriceWaterHouseCoopers (PWC) “A guide to performance Indicators, communicating the measures that matter”.
One of the first points made by PWC is that many boards of companies quoted on the Stock Market are presented with financial KPIs, even though they may be pursuing strategies like maximising customer experience, or attracting and retaining the best and brightest people.
The question is whether the KPIs presented to the Board allow them to assess progress against stated strategies?
The same for your business; what business strategy are you pursuing? What KPIs do you have that enable you to see how well you are doing executing the strategy?
KPIs are driven by the industry you are in but also should be linked to Positioning strategy (key area of differentiation).
To achieve success, it’s vital you are seen as different so develop KPIs that allow you to track and report how well you are doing. For example, Volvos are “safe” cars so their KPIs will tell the board how safe their cars are.
The overriding need is for the KPIs to be relevant to that particular company. You can look to your sector and maybe use some, but ultimately you will need to create some of your own which link to your Positioning.
PWC experience is that a company could expect to have between 4 and 10 KPIs.
If you’d like to help implementing KPIs in your company then get in touch. Later this year Ten Accountants will be releasing the KPI Business Manager to help our clients drive strategy, performance and results.